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Fund Times

Unearthing Value in Bonds

Panelists take a gloomy tone but wait to scoop up bargains when valuations become more attractive.

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Sarah Bush, an associate director covering fixed-income strategies for Morningstar, sat down Thursday with Laird Landmann of TCW, Gibson Smith of Janus, and Elaine Stokes of Loomis, Sayles to discuss when the Fed will raise interest rates and how quickly, opportunities in a soon-to-be-rising rate environment, and liquidity risks in the bond market.

Each panelist agreed that interest rates are going up and that the Fed will start raising rates sometime this year. Landmann, who is co-director of fixed income at TCW and a manager at Gold-rated  Metropolitan West Total Return Bond (MWTRX), spoke about the divergence in asset values and household income, noting that inflated prices are unsustainable and that the Fed would like to get rates a little higher so it can have some flexibility should economic conditions worsen.

Jeff Wagner does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.